Facebook sketches out IPO-mess defense; CTO departs

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Facebook sketches out IPO-mess defense; CTO departs

By Basil Katz and Edwin Chan

NEW YORK/SAN FRANCISCO (Reuters) – Facebook Inc (FB.O), facing a raft of lawsuits from investors seeking to recoup losses from its botched IPO, laid out on Friday how cascading Nasdaq trading glitches might have stoked the confusion that marred its May 18 debut.

The No. 1 social network and lead underwriters Morgan Stanley (MS), Goldman Sachs Group Inc (GS) and JPMorgan Chase & Co (JPM) have filed a motion requesting that dozens of shareholder lawsuits over its $16 billion initial public offering be grouped together in Manhattan federal court.

The filing, while standard in cases with multiple lawsuits, gives a glimpse at how Facebook may choose to structure its defense and represents the social networking company’s first public response to the chaos that engulfed its high-profile debut.

Facebook’s stock leapt 6 percent on Friday to end above $30 for the first time since May 25. It also recorded its biggest single-day gain since it began trading, as a string of recent improvements to its advertising system raised hopes about its prospects. But the eight-year-old company founded by Mark Zuckerberg in his Harvard dorm room has shed a fifth, or $20 billion, of its value from the $38 IPO price.

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